The thing is, Forex scams are pretty easy to sniff out once you know what to look out for, and make no mistake, there are thousands of websites that are waiting to take your money for no other reason than they can. Scammers and charlatans are aplenty when it comes to the internet and Forex is one of the ways that they rope eager, naïve investors in with wild promises, take your money - supposedly to be placed in a brokerage account. What happens to your money is it usually gets wired to several international accounts under false names and gets withdrawn within moments of your deposit. These scammers are sometimes operating worldwide, which means that they are some times quite impossible to trace.
What happens is that they will set up bank accounts in countries with loose financial laws or with a banking infrastructure or security measures that have not been fully developed. These include many third world countries in African states as well as parts of South America. They will then set up various accounts across the world under false names, in small banks that are connected to the international economy. PayPal does not have the necessary distinguishing tools and it normally acts as a financial middleman between the consumer and the merchant - routing the money from the internet credit transaction to the bank account of choice. All the scammers have to do is pay the nominal fee for the online banking charges and sit back and wait for the money to come rolling in.
When the money comes in, there is a tracking system within their website that alerts them of a sale and they send a single representative to withdraw the money immediately, making sure that the transaction is quick. In a matter of a few weeks or even days, the account is sometimes either left dormant or even closed - in sync with the closure of the website or service that they provide. Then the cycle happens all over again to someone else.
A new website is set up in some remote ISP, and bank accounts are then created. It is quite easy to spot a scammer's website from the real deal and because of their modus operandi, one check on the length that their website has been up is a good way to sniff them out. Make sure you check their company names; sometimes reliable companies do set up satellite websites to increase their internet coverage on the web, so make sure you do not confuse the two.
These websites also make unrealistic guarantees about your investments; and if it seems too good to be true, it usually is. There is no magic formula for you to make millions overnight, if that were the case, why are these people setting up a website instead of investing themselves? These are some of the ways to distinguish a Forex scam from the real deal and as you can see, it is pretty easy to spot them out. The internet and its own review system are there for a reason - to ensure that these scammers do not last long.
Is Forex A Scam
If you're looking at trading in the foreign currency exchange market (commonly known as the forex) and you have the classic Pink Floyd tune ?Money? playing in your head, complete with the ?cha-ching? sound, you might want to read this article first. With all of the forex brokers out there, ready and willing to take your cash to help you make your first trade, it may be a little intimidating finding a broker that can help your profits grow and not walk away with your cash! To that end, as part of your forex training, here are a few tips that will help you in selecting a broker that you can trust and not end up with a proverbial ?bucket shop.?
1.?There is no risk!? Watch out for a company that claims that there is little or no risk in trading the commodities market. Any broker that is legitimate should tell you that there is ALWAYS risk! True, you can mitigate that risk with stop losses, sound trading techniques, and equity management, but there is always a risk involved in trading. If it sounds too good to be true, it usually is too good to be true!
2.?It's in the background.? Check out the company's background. If a company refuses to give you background information on their company or information about their customer's experiences, beware! You may also want to check with the National Futures Association for any history of fines or deceptive trade practices by the company in question. Another excellent source of information is the Chicago Board of Trade. It's there that you can check to see if the company is a registered ?futures commission merchant? (or FCM for short). Companies registered with these two organizations are more likely to be legitimate than those that are not. In addition, there is a lot of information that can be found with these two organizations that can help you further your forex training.
3.?Millions are offered for the taking!? If a company says that you will make fantastic amounts of money in a short time, run for cover! Like anything else in life, to be a good forex trader takes time, effort, and LOTS of study. There is no magic bullet that will have you makings thousands in just a week (unless you're the scammer!).
4.?Be careful sending cash!? Use caution when sending cash over the internet. Make sure the entity you are sending money to has satisfied your background check and that they are registered to business in a country with strong legal remedies in case a problem arises. Be especially wary about sending money to countries that have reputations for high levels of corruption and bribery.
5.?Margins, Margins!? Use caution when trading on the margin. Depending on the broker, it may make you responsible for more money than you actually deposited! A key part of your forex training should teach you how margins work and your broker's approach to them before you trade margins.
6.?Which bank?? Watch out if a company states that they are safe to work with because they trade in the ?interbank market.? To date, the interbank market is largely unregulated and is usually traded by central banks, multinational corporations and other big time players. A potential scam by a fraudulent currency trading firm may boast of good prices because they deal with the ?interbank market.? It is most often the case that only extremely large concerns deal with the interbank, and again, it is not regulated and is a loose conglomerate large business and governmental organizations and institutions.
Now that you have some of this forex training under your belt, there are a few other ways to evaluate a broker. They are: websites that compare brokerages, forex training courses, word of mouth, and finally, checking in with an experienced retail forex trader who has good trading strategies and deals with his or her broker on a regular basis. Doing all of these things can help you make a great choice in selecting a forex broker which, of course, will help you keep that great tune ?Money? playing in your head.
Both Chris M Lee & Joe Guntherson are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Chris M Lee has sinced written about articles on various topics from Finances, Forex Review and Online Forex Trading. to claim your Free Forex “Basic Momentum Analysis” report today! Christopher Lee helps thousands of traders learn the proper way to. Chris M Lee's top article generates over 49500 views. to your Favourites.
Joe Guntherson has sinced written about articles on various topics from Forex Guide, Home Improvement and Hair Styles. is becoming the fastest way to get dollars in your pocket. Or in this case maybe some Yen. Our. Joe Guntherson's top article generates over 3600 views. to your Favourites.
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